Tine Stanovnik Faculty of Economics and Institute for Economic Research, Ljubljana Equity vs. Efficiency? Regional Seminar: Equity vs. Efficiency Zagreb,

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Presentation transcript:

Tine Stanovnik Faculty of Economics and Institute for Economic Research, Ljubljana Equity vs. Efficiency? Regional Seminar: Equity vs. Efficiency Zagreb, April 7th 2011

The need for clarity: Equality or Equity? Equality of what? Political rights, economic rights (»rewards«) and social rights (»needs«). The resource costs of these rights. The principle of horizontal equity (principle of non-discrimination).

The need for clarity: Technical and productive efficiency (looking at the cost or »supply« side). The transformation curve (Production possibility frontier). Allocative efficiency (looking at the »demand« side, optimizing benefits or a measure of social welfare for the population).

Health care and the pension system: technical and productive efficiency Technical and productive efficiency in health care: efficient management of hospitals, use of least-cost procedures (for a given outcome) etc. Technical and productive efficiency in the pension system: design of the system, minimizing negative effects on labour supply and output.

Health care and the pension system: allocative efficiency Macro allocative efficiency: equating marginal social benefits of all social interventions and programs. More down-to-earth, »micro« allocative efficiency: how are resources to be allocated within a given field of social expenditures (education, health care, pensions etc) so as to maximize a measure of social welfare?

Education: the rewards of tertiary education are high (high private rates of return), as seen in table 1 and table 2.

Table 1: Relative equivalized income by education levels of labour-active persons aged between 25 and 64 years BulgariaHungaryRomaniaSlovenia Primary Vocational Secondary Tertiary All1.00 Note: HU: all persons aged between 25 and 64 years Source: Source: Stanculescu, Stanovnik (eds), Activity, Incomes and Social Welfare, Ashgate.

Table 2: Persons with attained tertiary education level as percentage of working-age population, by income deciles Notes: BG, HU and RO: all persons aged between 25 and 64 years; SI: labour-active persons aged between 25 and 64 years. Source: Stanculescu, Stanovnik (eds), Activity, Incomes and Social Welfare, Ashgate. Decile All Early 1990s BG (1992) HU (1993) RO (1995) SI (1993) Early 2000s BG (2002) HU (2002) RO (2004) SI ( )

The efficiency of higher education – productive and allocative The fairness (equity) issue.